WTO rules against Mexico in U.S. rice antidumping case

Not all of the news coming out of the World Trade Organization is negative for U.S. growers. A WTO Appellate Body has ruled in favor of the United States in its challenge to Mexico’s antidumping duties on U.S. long grain white rice.

In a report issued Nov. 29, the Appellate Body upheld an earlier WTO panel’s finding that Mexico’s antidumping duties and various provisions of its antidumping and countervailing duty laws are contrary to WTO rules. Mexico currently is the No. 1 U.S. rice market, accounting for 17 to 20 percent of U.S. rice exports annually.

“We are pleased with the report, which confirms our view that Mexico’s determination was inconsistent with its WTO obligations,” U.S. Trade Representative Rob Portman said in announcing the Appellate Body’s ruling in Washington.

“While trade remedy laws are an essential part of the international trading system, they must be used in accordance with the rules. Mexico’s determination breached those rules, and we believe that disadvantaged our rice farmers. We are pleased that the Appellate Body agreed.”

Portman said the Appellate Body upheld the panel’s findings that Mexico improperly based its injury analysis on outdated information and failed to examine half of the injury data it collected. The Appellate Body also agreed that Mexico improperly applied its antidumping measure to two U.S. exporters that were not dumping.

In addition, it said Mexico improperly applied an adverse “facts available” margin to a U.S. exporter that had no shipments during the period of investigation, and that Mexico improperly applied “facts available” margins to U.S. exporters and producers that it did not investigate.

Finally, the Appellate Body upheld the panel’s findings that several provisions of Mexico’s antidumping and countervailing duty law are inconsistent with the WTO Antidumping Agreement and the WTO Agreement on Subsidies and Countervailing Measures. These findings are important because the provisions would adversely affect U.S. exports to Mexico of any product subject to investigation.

“The announcement is great news and resolves one of the many challenges facing rice farmers today,” USA Rice Federation Chairman Lee Adams said. “This report is the result of hours of work invested by Ambassador Rob Portman and his staff, along with tremendous support from Secretary Mike Johanns and his staff at USDA. The rice industry thanks them for their continued efforts to enforce trade agreements.

“This decision confirms what the rice industry knew to be true all along: Mexico’s antidumping duties on U.S. rice violated their WTO obligations,” Adams said.

Mexico imposed antidumping duties on U.S. long-grain white rice in June 2002, and the United States requested a WTO dispute settlement panel in September 2003. The U.S. request challenged numerous violations of Mexico’s obligations under the WTO. The panel issued its final report on June 6, finding in favor of the United States, and Mexico appealed the ruling on July 20.

The U.S. request challenged numerous apparent violations of Mexico’s obligations under the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Antidumping Agreement), the Agreement on Subsidies and Countervailing Measures (SCM Agreement), and the General Agreement on Tariffs and Trade 1994 (GATT 1994). These violations related to various procedures and methodologies Mexican authorities used in the rice investigation, as well as to the requirements of the Mexican legislation.

In particular, the proceeding addressed such issues as Mexico’s choice of data used in the investigation, its methodology for determining whether the Mexican industries were injured by reason of dumped imports, its failure to terminate the investigation when it found that no dumping or injury was occurring, its calculation of dumping duty rates applicable to imports, and its non-transparent determinations.

The challenged provisions of the Mexican law require Mexico to take WTO-inconsistent actions such as automatically applying excessively high antidumping margins on firms and denying firms the right to obtain reviews of the levels of duties assessed on their exports.

Under WTO rules, the Appellate Body report and the panel report, as modified by the Appellate Body report, will be formally adopted by the WTO Dispute Settlement Body within 30 days; i.e., by not later than Dec. 29, 2005.

“This victory marks the conclusion of a long legal process in the WTO,” said John King, III, a Helena, Ark., producer and chairman of the USA Rice Council, a member organization of the USA Rice Federation. “USA Rice members and staff invested considerable time, effort and resources defending market access in Mexico. We look forward to working with the administration to ensure that Mexico comes into full compliance.”